August 29, 2017

In Removing HSD Tables From Applications, CMS Opens the Door to Medicare Advantage Growth

Recently, the Centers for Medicare & Medicaid Services (CMS) released its draft 2019 Medicare Advantage application. Health plans seeking to participate in the Medicare Advantage (MA) program for the first time or expanding their service area must file an application with CMS. Although the application contains many types of information, the most formidable requirement is the submission of Health Service Delivery (HSD) tables, by which the MA applicant must show that its provider network meets CMS’s network adequacy standards.

HSD Tables: An Overview

For decades, managed care plans participating in Medicare have submitted their contracted provider networks on HSD tables as part of the application process. In 2009, the review of networks was automated by geo-mapping contracted providers against default time and distance and provider counts for every U.S. county. In order to pass this review, plan applicants needed to complete their provider contracting by the early spring for a plan year starting the following January. This roughly eight-month delta limits MA expansion. Each spring, dozens of MA applicants must trim their desired service areas because they are unable to finalize their provider contracts by CMS’s deadline.

MA Applications Without HSD Tables: Coming Soon?

Per the 2019 draft application, CMS is proposing to remove HSD review from the application. In a summary table of application changes, CMS briefly states it will “[r]emove HSD submission requirement and network review.” Instead of submitting HSDs, MA applicants will have to attest to the following:

3.8.8. Applicant attests that it will have a contracted network in place that meets current CMS Medicare Advantage network adequacy criteria for each county in its service area prior to marketing and enrollment efforts for the upcoming contract year.

3.8.9. Applicant attests that it will monitor and maintain a contracted network that meets current CMS Medicare Advantage network adequacy criteria as represented in the most recent version of the Health Service Delivery Reference File.

The practical impact of this change is that MA applicants will have until “marketing and enrollment efforts” for the upcoming year to finalize their provider networks; this will give MA plans an extra half year to nail down provider contracts. CMS’s first actual review of their networks likely will not occur until several months after that.

A New Method of Network Adequacy Oversight

Per another draft document released earlier this summer, CMS seeks to begin collecting HSDs from active MA plans and conducting network adequacy reviews as part of an “operational function.” So, the agency is not ending its scrutiny of provider networks. Rather, it is moving the oversight from the application process into its ongoing oversight program. A recent Government Accountability Office (GAO) report suggested the agency’s oversight of MA providers would remain incomplete “until the agency collects evidence of compliance on a regular basis.” CMS’s migration of HSD review out of the application speaks to this criticism.

The Medicare Advantage program has grown steadily for more than a decade. Currently, one third of Medicare beneficiaries choose MA plans because of their extra benefits, care management and affordable cost sharing. But MA plan growth is uneven. The changes to the 2019 application could make it much easier for MA plans to expand nationally.

The 2019 Medicare Advantage application is out for public comment.

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